"The debt issue is tightening constraints on the old investment-driven growth model," Andrew Colquhoun, head of the agency's Asia-Pacific Sovereigns section, said in the China Daily today.

The total amount of credit in China's economy is currently about 190 percent of GDP, up from 124 percent at the end of 2008, Fitch said. China's sovereign credit rating remains AA- but with a negative outlook. Fitch kept its stable outlook of A+ for the country's foreign debt holdings. Rapidly expanding credit may risk balance sheets, it said.

"I think that China banks are definitely a cause for concern," Allan Conway, a fund manager at Schroders in London said in a phone interview this week. "But having said that, I don't think those problems come home to roost this year."

Proponents of a China hard landing say that the big four government banks have a growing number of non-performing loans owed by cities and states across the country. Expanding credit to investment projects that struggle to show a profit in the medium term is a cause for concern for China investors.

China's Big Four

The national banks was a favorite of short-sellers at this time last year due to the thesis of non-performing loans and tightening real estate policies designed to pop a looming housing market bubble.